BNP Paribas Attacked by US Justice … The American Banking Lobby Against the European Banks?

BNP Paribas attacked by the U.S.? Another tactic to “defend” U.S. bankers … by dragging down the European competitors? Who knows …

In any case, quoting sources close to the negotiations, The Wall Street Journal indicated on May 29 that the U.S. Department of Justice exhorted the French bank to pay more than $10 billion in order to end the litigation on suspected infractions to economic sanctions imposed against Cuba, Iran, Sudan or Libya between 2000 and 2010.

Caution should be exercised when facing what simply resembles an “attack” orchestrated from the U.S. against the European banks. According to several analyses, BNP Paribas could be the first of a long list of financial establishments of the old continent likely to be heavily penalized by the U.S. Department of Justice.

According to The Wall Street Journal, the total sum BNP Paribas has to pay constitutes one of the most important fines ever sentenced to a bank. There is enough here to prolong the debate for many weeks, if we believe the WSJ. The latter added that sources close to the case would be trying to limit the fine to $8 billion.

Just a few days ago, Bloomberg claimed that the most competitive French bank could be sentenced to pay fines up to $5 billion by the U.S. Department of Justice. Two weeks prior, some sources close to the case had mentioned that the bank was negotiating a fine amounting to about $3 billion.

It seems the Americans are becoming more and more pushy … and greedy … and, if BNP Paribas has in fact recorded a provision of $1.1 billion for the last quarter of 2013 to anticipate the financial repercussions of the trial, the bank, nevertheless, was warned at the end of April that the fine could exceed this amount.

Another substantial and worrying element: According to the WSJ, BNP Paribas is waging war on another front, that is, eschewing the temporary suspension of the bank authorization to transfer funds to and from the U.S. It would have dire consequences on the development of the bank, notably commercial banking activities and the investments in the U.S.

It must be said that the investigation, which was opened in 2010, aims at determining if BNP Paribas circumvented the American embargo norms between 2002 and 2009, notably in the domain of trade commodities. The aforementioned activities could have been run in countries where they were legal, but they would have been paid for in dollars on U.S. territory. At the beginning of 2014, an internal investigation of the bank had shown “a substantial operation volume that could be considered non-authorized according to U.S. laws and norms.”*

This case has been brought to the forefront while about ten days ago Credit Suisse accepted the responsibility to pay more than $2.5 billion in fines and penalties. The bank pleaded guilty to the charge of tax evasion.

American authorities would like to obtain a similar confession from the BNP. Among the arguments developed by the U.S. Department of Justice to bend the French position: The Credit Suisse share price per capita has not been penalized by the negotiations. So now the U.S. Department of Justice bases its argumentation on the market prices. Marvelous, isn’t it?

The governor of the Bank of France, Christian Noyer, declared last week he is being “extremely” attentive to the evolution of the case and the “risks that emerged from what could be the evolution of the American jurisprudence.”

On this occasion, Christian Noyer reiterated to the European banks to remain “watchful.” He highlighted the fact, regarding the BNP, that the Bank of France had verified that “all the transactions were following the laws, norms, regulations of the French and European framework,” and even the American framework.

This case is alarming. Several banks affirmed that if multibillion dollar penalties are to be imposed on other European banks, their assets could shrink, which would lead to a reduction in the volume of credit lending to Europe. A situation which would cause the U.S. banks to rejoice because they could compete against weakened competitors.

*Editor’s note: These quotes, accurately translated, could not be verified.